Monday, March 25, 2013

Investment sales of hotels slip to $1.45b last year

The Business Times  |   March 21, 2013

[SINGAPORE] Investment sales of hotel real estate in Singapore slipped from $1.58 billion in 2011 to $1.45 billion last year, according to property consultancy Knight Frank.

One of the reasons that fewer deals were closed was the pricing gap between buyer and seller expectations.

The bullish medium- term outlook for the hotel industry here also means that current owners were keen to hold on to their assets.

Major transactions which took place last year included Klapsons The Boutique Hotel ($360 million), Hotel Grand Pacific ($210 million), and Hotel Windsor ($163 million).

An earlier report by CBRE Hotels put the investment sales of hotel assets for 2012 at $1.07 billion, down 34 per cent year-on-year.

"Strong tourism numbers have prompted more boutique and international hotel chains to turn their focus on Singapore. I believe we could see at least $800 million worth of deals over the next two to three years," said Ian Loh, director and head of investment for Knight Frank Singapore.

Last year, the industry-wide average room rate climbed to $261 from $247 in 2011 while the average occupancy rate was flat at 86 per cent. Revenue per available room rose to $226, up from $214 previously.

The Knight Frank Quarterly Research Bulletin projects that hotel room inventory is slated to grow by over 20 per cent to 53,000 by 2015. The compound annual growth rate of 6.5 per cent is slightly higher than the Singapore Tourism Board's (STB) expected tourist arrivals growth rate.

Nearly half of the new supply will stem from the mid-tier hotel category.

"An additional 5,000 hotel rooms are potentially in the pipeline by 2017, which have yet to receive planning approval," said Mr Loh.

The report pegs the number of hotel rooms coming onstream this year at some 5,020 rooms, which could put some pressure on room and occupancy rates.

"We expect the occupancy rates to drop marginally but still (remain) above the 80 per cent mark. Average room rates may fall marginally to account for the lower occupancy levels," Mr Loh added.

Amid moderating global tourism growth, the STB is projecting that Singapore will see $23.5 billion to $24.5 billion in tourism receipts this year, while visitor arrivals are expected to clock 14.8 million to 15.5 million.

The Knight Frank report also highlighted that Singapore's tourism industry could benefit from a weaker economic climate as top visitor-generating markets such as Indonesia, China and Malaysia could eschew pricier long-haul trips in favour of intra-Asia travel.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C

Senior Sales Director
DTZ Property Network Pte Ltd (L3007960A)

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